Mirae favors Asia for future growth

Industry

Mirae favors Asia for future growth

Published: 18 Nov. 2009, 22:21

Koo Jae-sang

Finding the next Samsung Electronics and taking advantage of China’s torrid economic growth will be the two most important tasks for Korean asset managers, said Koo Jae-sang, chief executive of Mirae Asset Global Investments, one of Korea’s top two asset managers.

Koo is a towering figure in Mirae Asset Financial Group, the rapidly rising rookie in the nation’s financial market, who long shunned the media spotlight while grappling to keep Mirae Asset Global Investment, an asset management subsidiary under Mirae Asset group, at the top echelon of the industry.

Koo, in an exclusive media interview, his first in more than two years, said governments and companies around the world are now in a frantic search for the next growth drivers that will sustain survival after the economic downturn. And now is a crucial time to find out exactly what industries and companies will emerge as the next big stars out of the current fog of uncertainties.

Q. When extreme pessimism prevailed in the local stock markets early this year, only you forecasted that the benchmark Kospi would recover at least up to 1,500 points by the end of this year. On what basis did you say that?

A. Actually, I wasn’t supposed to be specific enough to utter a certain number, though no one believed me anyway. But I was so frustrated [with the pessimism] because I had faith in Korean companies’ global competitiveness. Even foreign analysts are increasingly recognizing Korean companies’ resilience, but local investors and analysts tend to be far more pessimistic. Our main exporters persevered even when our economy slumped and the won dramatically weakened against the U.S. dollar, since the weak won gave them fresh price competitiveness. But a weak won is hardly the only factor that helped Korean companies. It is a result of the companies’ years-long efforts to improve immunity against rainy days and upgrade their brand value. Now there is no such thing as a purely domestic company. Companies that had previously relied on domestic consumers like Shinsegae, Amorepacific and LG Life Sciences are all expanding their businesses in the Chinese market. What’s important for corporate valuation from now on is whether a company can secure a relatively better standing in the global competition and expand market share.

What specific companies do you have in mind?

Where there is a growth there is profit. Until the mid 1990s, the benchmark Kospi hovered around 500 to 1,000 points for nearly 10 years. But looking back, there was a huge investment opportunity. For instance, the share price of Samsung Electronics, which stayed around 30,000 won, is now more than 700,000 won. And there are lots more companies like Samsung Electronics in the current stock market - companies that have enormous potential but whose share price is undervalued.

Some companies are seeing their share price stay at an even higher level than when the Kospi was above 2,000 points, like LG Chem, Hyundai Motors, Samsung Techwin, LG Life Sciences, Samsung SDI and Samsung Electro-Mechanics. The change is already upon us. We are interested in industries like smart phones, Amoled (active-matrix organic light-emitting diode), electric cars, smart grids and alternative energy sources. We prefer companies that move pre-emptively toward the future. We take a look at their growth vision, global competitiveness and the prospect to commercialize their technologies.

There have been enormous changes in the market since the financial crisis. What is the main issue you think the investors should pay most attention to?

I would say the accelerating shift of the global economic pillar toward emerging markets. Emerging markets were certainly hit hard by the downturn last year, but they are the very first ones emerging out of it and running toward growth once the dust settles. A majority of global investors I have met recently were all thinking about allocating more of their assets in Asian markets.

Who is Koo Jae-sang?

Koo is considered a towering figure in the relatively short history of Korea’s asset management industry.

Koo, along with the Mirae Asset Financial Group Chairman Park Hyun-joo, is the main architect behind the stock fund boom that swept the country from the early 2000s.

Mirae, an industry rookie established only in 1999, gained enormous popularity among ordinary investors with its “Discovery” and “Independence” equity fund series, which posted accumulated returns of more than 500 percent from 2001 to 2007.

Now Mirae Asset Global Investments, led by the 45-year-old Koo, has become an undisputed powerhouse in the nation’s asset management industry with more than 56 trillion won ($48.5 billion) under its management.

Koo, a business graduate from Yonsei University, became a branch head of Dongwon Securities at 31, a rarity in the conservative financial industry, and later helped establish Mirae Asset group. Now Park is in charge of devising the group’s future strategies while Koo is overseeing the asset management.